Markets to make optimistic start on ease in geopolitical tensions

Indian stock markets rose notably on Friday on the back of positive global cues and optimism over the ongoing earnings season. Today, the markets are likely to make an optimistic start, as tensions in the Korean Peninsula eased after a spectacularly successful inter-Korean summit. Traders will take some encouragement with Niti Aayog Vice Chairman Rajiv Kumar’s statement that India’s economy to grow by at least 7.5 per cent in 2018-19 on the back of improvement in investment cycle and capacity utilisation. The government should now concentrate on consolidating the reform initiatives undertaken in the last 47 months, he added. Some support will also come with report that the Reserve Bank of India (RBI) is withdrawing a restriction that limited foreign investors to only investing in government and corporate bonds with tenures of three years or more, a move that could bolster the domestic bond market. Traders will react on report that Fitch has kept India’s rating unchanged with a stable outlook, saying the rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. Upbeat quarterly earnings from Reliance Industries (RIL) may also buoy investor sentiment. RIL posted its second highest quarterly profit for the March quarter even as gross refining margins came in below expectations. There will be some important earnings announcements too, to keep the markets buzzing.

The US markets showed a lack of direction over the course of the trading day on Friday following the rally seen in the previous session. The major averages spent the day bouncing back and forth across the unchanged line before closing slightly in green. Asian stocks are trading higher on the last trading day of the month, as investors focused on a mix of ebbing geopolitical tensions, robust earnings and economic data.

Bulls tightened their grip on Dalal Street with key gauges ending near their crucial 35,000 (Sensex) and 10,700 (Nifty) levels. Markets started the session on an optimistic note with private report stating that India’s economic growth will accelerate to 7.2% in the current fiscal buoyed by manufacturing activity even as rising oil prices and high government debt remain a challenge. The agriculture sector is expected to grow higher than the estimated 2.1% in the current fiscal year on account of positive prospects on Rabi harvest and a normal monsoon. Markets traded jubilantly throughout the session as traders took encouragement with NITI Aayog’s statement that 3.53 million (35.3 lakh) new jobs were generated between September 2017 and February this year. The EPFO data shows that from September 2017 to February 2018, 3.1 million (31.10 lakh) new payroll additions were made across all age groups. Adding to the optimism, Confederation of Indian Industry’s (CII) president Rakesh Bharti Mittal said that demand in the economy is picking up and it is time private investment started flowing in. He added that India’s economic environment started improving due to introduction of major reforms such as GST, Insolvency and Bankruptcy Code, and fixed-term employment. Some support also came after global credit rating agency Fitch affirmed India’s sovereign rating at ‘BBB-’ with stable outlook, saying that the country’s medium-term growth potential is strong. The agency added that India’s rating balances a strong medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and a still-difficult, but improving, business environment. It projected India’s growth at 7.3% in current the fiscal and further to 7.5% in 2019-20. Finally, the BSE Sensex surged 256.10 points or 0.74% to 34,969.70, while the CNX Nifty was up by 74.50 points or 0.70% to 10,692.30.